U.S. announces Xinjiang sanctions

Dear Access member,

Our top story today is about the Xinjiang internment camps — one conflict of values between China and the U.S. Our second item today is about another conflict: As you can read below, the NBA seems to have found its spine and defended the right of its staff to free speech. Also covered below is another story that may get drowned out in the tsunami of news this week: 

One of America’s biggest video game companies — Blizzard Activision — banned a player and cancelled the prize money he had already been awarded because he expressed support for protests in Hong Kong. 

If you are in New York, these two events may interest you:

• CHAINSIGHTS 2019 Fintech and Blockchain Summit on October 10: For The China Project readers, use the code “SPC” for free tickets (general admission, no lunch included, 8:30 a.m.–6:30 p.m.). Click here for details. 

• Live Sinica Podcast on October 16, with guest speaker Professor Jerome A. Cohen, perhaps the world’s most respected and experienced scholar of P.R.C. law, and still a firebrand. Click here for details. 

And finally, our next The China Project Direct conference call will be held next week Tuesday at 8pm EST. Rob Petty, Co-CEO of Clearwater Capital Partners, will talk about China’s new foreign investment law, the situation in Hong Kong, and what the future may hold. Access members can attend the call free of charge, but please email me at jeremy@thechinaproject.com in advance to reserve a spot. 

The Hangzhou headquarters of HikVision (海康威视 hǎi kāng wēi shì), a Chinese surveillance company that is one of over two dozen entities targeted with sanctions by the U.S. Commerce Department for human rights abuses in Xinjiang. Photo credit: Wikimedia. 

1. Xinjiang sanctions finally come, two days before 13th round of trade talks

The system of mass internment camps for Uyghurs and other ethnic minorities in Xinjiang has been documented in a steady stream of compelling reports over the past two years, starting in the fall of 2017 and through recent months. 

Activists have long wondered when the U.S. government might act — with something more than words of condemnation, or diplomatic letters — and impose sanctions on Chinese companies and officials for the abuses. The sanctions have finally come in the past 24 hours:

• The U.S. Commerce Department has put 28 Chinese companies and public security bureaus on its Entity List, banning American companies from supplying them. “The companies added to the so-called ‘Entity List’ include facial recognition start-ups Sensetime, Megvii and Yitu, video surveillance specialists Hikvision and Dahua Technology, AI champion iFlyTek, Xiamen Meiya Pico Information Co and Yixin Science and Technology Co,” per the SCMP. 

• Visa restrictions for Chinese officials were also announced by the State Department, CNBC reports, though the scope of these measures was not immediately clear. In a press release, Secretary of State Mike Pompeo said the restrictions would be aimed at officials “who are believed to be responsible for, or complicit in, the detention and abuse of Uighurs, Kazakhs, or other members of Muslim minority groups.” 

However, neither of these measures invoked the Magnitsky Act, as some activists had hoped, and which would have additionally frozen assets of individuals. 

Trade talks begin on Thursday

The Xinjiang issue is separate from trade talks, but there are a few ways they could be connected in this instance. 

• Treasury Secretary Steven Mnuchin previously held off on sanctions to avoid disrupting trade talks, and he also played a central role in previous trade talks. This news suggests he either changed his mind, or his hand was forced, or he has been sidelined in this week’s upcoming talks. 

• The Commerce Department restrictions are likely to be seen by Beijing as economically motivated to help American companies compete in AI and other advanced technologies. As the Financial Times reported, many of these companies are highly dependent on foreign technology components. The Chinese Foreign Ministry has already urged the U.S. to undo the “mistaken decision” (in Chinese) and said that we should “stay tuned” for potential retaliation against these measures. 

Chinese Vice Premier Liú Hè 刘鹤 is still set to lead the talks in Washington from October 10 to October 11, according to reports in Xinhua that also list key members of the Chinese delegation (in English, in Chinese). 

—Lucas Niewenhuis

2. NBA stands firm as CCTV cuts preseason broadcasts and brands flee

Two days after the NBA groveled to Chinese fans over a tweet by Houston Rockets General Manager Daryl Morey that supported Hong Kong protesters and sparked outrage on Chinese social media, Chinese state broadcaster CCTV rewarded the basketball league with a complete blackout of all preseason games. CNBC reports that “Tencent, which owns the digital streaming rights for NBA in China, said it would also ‘temporarily suspend’ the preseason broadcast arrangements.” 

“We are strongly dissatisfied and we oppose Silver’s claim to support Morey’s right of free expression. We believe that any speech that challenges national sovereignty and social stability is not within the scope of freedom of speech,” the CCTV statement read, according to CNBC. Here is a link to the statement on Weibo (in Chinese). 

In a change of tactics, NBA Commissioner Adam Silver released a statement that reads, in part:

Values of equality, respect and freedom of expression have long defined the NBA — and will continue to do so… 

It is inevitable that people around the world — including from America and China — will have different viewpoints over different issues. It is not the role of the NBA to adjudicate those differences.

However, the NBA will not put itself in a position of regulating what players, employees and team owners say or will not say on these issues. We simply could not operate that way.

Silver is now in Japan, and will travel to China tomorrow in hopes of defusing the conflict, the New York Times reports:

In a news conference before a separate preseason game between the Rockets and the Toronto Raptors being held in Tokyo on Tuesday, Silver said the cancellation was unexpected, and a community outreach event scheduled to take place at a school in Shanghai also had been canceled.

“I think it’s unfortunate,” Silver said. “But if that’s the consequences of us adhering to our values, we still feel it’s critically important we adhere to those values.”

The two games scheduled for this week feature LeBron James and the Los Angeles Lakers against the Brooklyn Nets. The Nets are owned by Joe Tsai, the billionaire co-founder of the Chinese e-commerce giant Alibaba. In a lengthy Facebook post, Tsai criticized Morey’s tweet as damaging to the N.B.A. in China.

Silver said that he would still travel to Shanghai on Wednesday and that it was his hope to meet with Chinese government officials to try to defuse the conflict.

“But I’m a realist as well, and I recognize that this issue may not die down so quickly,” Silver said.

It won’t die down quickly, indeed. Brands continue to cut ties with the NBA — mind you, the whole league, not just the Houston Rockets, whose GM posted and quickly deleted one tweet seen to be offensive — including Luckin Coffee and the sportswear brand Anta, according to the New York Times. Smartphone brand Vivo also cut ties, Reuters reports.

At least one other company is self-censoring to avoid the NBA’s fate, Deadspin reports: “Chuck Salituro, the senior news director of ESPN, sent a memo to shows mandating that any discussion of the Daryl Morey story avoid any political discussions about China and Hong Kong, and instead focus on the related basketball issues.” 

A separate storm brews at Blizzard

China’s hypersensitivity over Hong Kong has also hit the world of esports. Kotaku reports:

Chung “Blitzchung” Ng Wai, a pro Hearthstone player from Hong Kong, ended a stream earlier this week with a statement of support for those engaged in months-long protests against local police and government. As a result of this, Blizzard has ruled that he violated competition rules, and have handed out a heavy punishment. 

In the stream, part of the broadcast of the Asia-Pacific Grandmasters, Blitzchung wore a mask (similar to those worn by protesters) and said “Liberate Hong Kong. Revolution of our age!”

Blizzard Activision owns Hearthstone, the digital card game that Chung was playing, and Tencent has a 5 percent stake in Blizzard. Blizzard Entertainment said in a statement that Chung had violated this part of their code of conduct, and so he received the corresponding punishment: 

Engaging in any act that, in Blizzard’s sole discretion, brings you into public disrepute, offends a portion or group of the public, or otherwise damages Blizzard image will result in removal from Grandmasters and reduction of the player’s prize total to $0 USD.

—Lucas Niewenhuis

BUSINESS AND TECHNOLOGY:

• Overseas trips during Golden Week down 15 percent
  Chinese cut back on travel over the Golden Week holiday / Bloomberg (porous paywall)
  “The number of mainland residents traveling abroad in the first six days of October fell 15.1% compared to a year ago, the State Immigration Administration said. The number of domestic trips grew 7.8% this year, but that was slower than the 9.4% growth pace during last year’s holiday week, the Ministry of Culture and Tourism said.”

• Online education
  Tencent leads E-round funding in Chinese online educator Vipkid / TechNode
  “The company did not specify the size of this round, but local media reported in September that Tencent would invest $150 million in the company at a valuation of $4.5 billion.”

• 5G mobile
  5G pre-registrations close to 10 million in China as the country aims to be a leader in new network technology / SCMP
  “Chinese mobile users are showing keen demand for next-generation 5G network technology with pre-registrations for the service in the country nearing 10 million despite the small pool of handsets currently available.”

• Regulating screensucked citizens
  Pedestrians in eastern China face US$7 fine for checking mobile phones while crossing the road / SCMP
  “The People’s Congress of Jiaxing in Zhejiang Province, the city’s legislature, banned people from browsing on handheld electronic devices such mobile phones or ‘frolicking’ [playing] on zebra crossings, Xinhua reported on Sunday.”

SCIENCE, HEALTH, AND THE ENVIRONMENT: 

• Using recycled fuel in cement production
  Could China’s cement industry be fueled with household waste? / Chinadialogue
  “About 40% of emissions [in cement production] have traditionally come from burning fossil fuels to heat kilns (with the final 5-10% accounted for by operations and transport). This means there is significant scope to reduce overall cement emissions by finding alternative fuels. In Europe, the use of natural gas, biomass and waste-derived fuels in cement-making has increased to about 43%, but in China the proportion is still only around 8%.”

POLITICS AND CURRENT AFFAIRS:

• Xinjiang internment camps
  Company making Costco pajamas flagged for forced labor / AP
  “U.S. Customs and Border Protection on Oct. 1 slapped rare detention orders on goods imported from an unprecedented five countries in one day based on allegations that people producing those items might be children, or adults subjected to forced labor.” But before that order went into effect, these shipments reportedly happened: 

One major case from last week involves China’s Hetian Taida Apparel, which AP reported last year was forcing Uigher Muslims and other ethnic minorities to sew clothes for U.S. importers inside a Chinese re-education camp… 

…last month, Costco Wholesale Corp. began importing baby pajamas made by the company. On September 21, 2019 and again on Sept. 26, 2019, Hetian Taida sent shipping containers filled with 100% polyester blanket sleepers for babies and toddlers to the U.S., labeled for Costco, according to shipping records.

• Uyghur language school co-founder detained in Xinjiang internment camp / Radio Free Asia
  “Hesenjan Ismail, a graduate of the Dalian University of Technology in China’s Liaoning province who in 2009 launched the 606 Language School in Korla (in Chinese, Kuerle) city, in the XUAR’s Bayin’gholin Mongol (Bayinguoleng Menggu) Autonomous Prefecture, was detained 16 months ago, according to his former business partner, Elijan Amet.”
  China has begun moving Xinjiang Muslim detainees to formal prisons, relatives say / NPR
  “Last month in Kazakhstan, NPR interviewed 26 relatives of ethnic Kazakhs and Uighurs currently detained or imprisoned in Xinjiang and five former detainees. They said that rather than setting free reeducated citizens, the authorities have been transferring many detainees to formal prisons. Those who have been released remain under strict surveillance.”

• Hong Kong
  Hong Kong property developer Ronnie Chan calls for strong leader to handle protest crisis and slams ‘ridiculous’ idea of civil servants being in charge / SCMP

One of Hong Kong’s most influential property developers has said the city’s protest crisis requires a strong political leader and that having a civil servant in charge is “ridiculous”… 

Chan said Lam, a former top civil servant, had made efforts to tackle the city’s land and poverty problems, but the job required more than that… 

Chan said the cause of Hong Kong’s problems was not any social issue, but the political issue of national identity.

He said Hongkongers did not identify themselves as Chinese and instead looked down on mainlanders. Chan attributed this to Hong Kong people watching as their counterparts across the border had grown wealthier than they were.

• Hong Kong school says it will not expel second teen shot by police during anti-mask protest, even if he is convicted of crime / SCMP
  Chong Gene Hang College has promised to not expel a 14-year-old boy who was shot in the leg by police during a protest on October 4. This follows a similar promise by the school of the 18-year-old who was shot in the chest by police during a protest on October 1.
  ‘Go back to mainland’: Chinese fear becoming targets of Hong Kong protesters’ wrath / Inkstone

“I can’t understand why speaking Mandarin is now a sin in Hong Kong,” said “Mary,” a 35-year-old who works in the financial industry.

A few weeks ago, the native of the southern province of Guangdong said she was chatting in Mandarin with a friend in Hong Kong when a young man walked past and began shouting obscenities at them and saying they should “go back to mainland China.”

Mary (not her real name — she fears being bullied if her identity is revealed) said the incident left her shaken and upset… 

“I cried as I walked home. It was the first time in 10 years of living in the city that I had been targeted and intimidated just for speaking Mandarin.”

• Losing friends in Prague
  Prague cuts sister-city ties with Beijing amid ‘tangible anger’ over pro-China policies / SCMP

Prague’s decision to end its sister-city agreement with Beijing reflects “tangible anger” in the Czech Republic over the president’s pro-China policies, analysts say.

The Prague city council voted on Monday to pull out of the partnership deal after mayor Zdenek Hrib’s unsuccessful bid to get Beijing to remove a “one China” pledge from the agreement. He argued that the pledge — confirming Beijing’s sovereignty over Taiwan — was a political matter and unsuitable for inclusion in the sister-city deal because it was a cultural arrangement.

The decision, which still needs approval from the city assembly, was understood to have prompted heated exchanges between Chinese diplomats and Czech officials.

• Teflon Mahatir
  No backlash from Beijing, Malaysian PM Mahathir Mohamad says, after he urged Carrie Lam to quit / Star Digital via SCMP

Mahathir said he only commented on the issue because it was a question from a Hong Kong lawyer during an event.

“I did not want to pass any opinion of what is happening there because I regard it as an internal matter. I was asked for my opinion as to what [Lam] should do, and my reply was that she is in a dilemma and she should resign. That’s all,” Mahathir said.

Pressed by a reporter who asked whether he received any backlash from China over his remarks, Mahathir said “no, nothing.”

• Philippines and the South China Sea Great Game
  Courting Russia with South China Sea oil is a ‘dangerous gamble’ for Duterte / SCMP

[Philippine President Rodrigo] Duterte made the offer to Rosneft on October 2, when together with his national security adviser and ministers for defence, energy, foreign affairs and finance he met the directors of the Russian firm, including its chief executive Igor Sechin. While few details were publicly disclosed, Duterte’s spokesman Salvador Panelo said the president had “invited Rosneft, the leader in the Russian oil sector, to invest in the Philippines, particularly with regard to oil and gas development.”

• Kashmir: China no longer referencing UN Charter to resolve conflict
  Ahead of PM Modi-Prez Xi meet this week, a shift in China’s Kashmir stand / Hindustan Times

China on Tuesday said the issue of Kashmir should be resolved between India and Pakistan through dialogue and consultation, omitting the recent references Beijing had made about addressing the dispute in accordance with the UN Charter, UN Security Council resolutions and bilateral agreement.

The change in Beijing’s position comes on a day when Prime Minister Imran Khan is in Beijing, and days ahead of President Xi Jinping’s India visit where he will have the second round of the “informal summit” with Prime Minister Narendra Modi.

• State media terminology
  China’s “mainstream” / China Media Project

In the realm of media and public opinion, one of the most misunderstood words in contemporary mainland Chinese, completely co-opted by CCP discourse, is “mainstream,” or zhǔliú (主流).

For many of us, the word simply refers to ideas or beliefs that are shared by most people, that are conventional, or to media that cater to mass audiences and their views, beliefs and interests. But for the Chinese Communist Party, guiding and maintaining public opinion, ensuring that it reflects the interests of those in power, is essential to maintaining the regime. The “mainstream,” therefore is the prerogative of the Party itself, and when you talk about “mainstream media” in China, you are talking not about commercial newspapers and magazines or big-brand online news sites — you are talking specifically about Party-run media.

• Naval review with Japan
  Chinese destroyer sets sail for Japan for multinational fleet review / SCMP
  “China has sent one of its newest and most advanced destroyers to take part in a naval review hosted by Japan next week, Chinese state media said, in the latest effort to improve relations between the two nations at the military level despite their ongoing territorial disputes.”

SOCIETY AND CULTURE:

• Double Ninth Festival festival
  The Double Ninth in 2019 — settling scores, fleeing the Qin and eating crabs / China Heritage
  “The 7th of October 2019 is the Ninth Day of the Ninth Month of the Lunar Calendar, a day that marks the Double Ninth Festival…the Double Ninth or Double Brightness Festival 重陽節 [chóngyángjié] is a celebration of the autumn, a time of late bounty, seasonal change, lingering beauty and finality. It is also a time of encroaching darkness and death; a season during which old scores are settled.”

• Lion dancing
  The lion dancing women reinventing a Chinese tradition, showing it’s not just a ‘sport for boys’ / SCMP
  A feature on the Shaolin Entertainment Lion Dance Troupe in Southern California. Also see a video of the dancers in action. 

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